Thursday, March 15, 2012

On Pragmatic Capitalist Being Amazed

I have to admit that the current rally is surpassing anything I would have ever expected at the beginning of the year.  We’re in that “can’t lose” market environment where every little dip is bought, every data point is positive and stock literally don’t go down.  And when one digs a little deeper into the story behind this rally you can see just how amazing it’s been.  Here are the year-to-date stats (that’s 2.5 months for those keeping track):
Germany’s DAX: +20%, 96% annualized
S&P 500: +11%, 52% annualized
S&P 500: up 67% of all sessions, just one -1% day in 51 trading sessions.
Nasdaq 100:  +19%, 91% annualized, up 73% of all sessions.
Homebuilders Index: +23%, 110% annualized
S&P Financials: +21%, 100% annualized
Apple, the world’s largest company: +45%, 216% annualized
Here's what I wrote in the EPJ Daily Alert on the first trading day of 2012:
 Markets are wasting no time at the start of 2012. Most are opening up
in line with my expectations

Global markets are very strong and indications are that U.S. markets
will open more than 150 points higher.

West Texas intermediate crude oil is up over $101per barrel, a gain of
2.5% plus.

Treasury prices are down.

Yields on 30-year bonds are up  8 basis points to 2.98%.

Two-year-note yields are up 2 basis points to 0.27%.

These are all trends I expect to continue well into the new year. If
Bernanke resumes aggressive money printing the trends should continue
through out the year
Here's what I wrote in the Alert on January 15:
All this continues to show the manipulated "recovery" in the economy.
The numbers will only get stronger from here. The stock market and
overall prices will start to climb with much more intensity.
This is what I wrote in the Alert on February 1:
This adds further support to my view that any weakness in US stock and commodity markets should be bought.
This is what I wrote in the Alert on March 1:
As long as Bernanke is printing, stay long commodities and the stock arket. Use any weakness in markets as buying opportunities. Markets will rebound very quickly from sell offs.
There's nothing surprising about this market run and it is far more than a "rally". It's a major Fed induced Bull Market. I wrote last week in the Alert:
 On February 29 Apple became only the sixth company in U.S. history to
top $500 billion in market capitalization. Since the first of the
year, Apple has gained 32 percent, outstripping its gains for all of
2011. It now accounts for more than 4 percent of the weight of the S&P
500 index.  This is more Bull Market anecdotal evidence. All bull
markets have their leaders and Apple is leading this bull run. 
There will be pullbacks from time to time, but the trend is clearly
higher and will continue so as long as Bernanke stands next to the
printing press.
Intra-day Apple stock hit $600 per share, today. The stock market boom (and it is far from over) will be followed by a price inflation spectacular. Be prepared. It will be even more surprising than the recovering economy and stock market boom.


  1. Wow you really nailed the rally...I've owned walmart for years, and it has budged since the crash in 2001...and since last october it's up over 20%!

    I'm going to ride this rally a bit longer, and start selling off my weaker stocks soon. Thanks Robert!

  2. My dilemma: I turn 59-1/2 in about a month, and so I can take out money from my 401k and several IRAs without penalty. I am seriously considering taking it ALL out, maybe $300k, and buying gold/silver, and then waiting for the "other side" of whatever happens.

    I will owe the IRS maybe 35% = $100k of that. But, if by Apr 15th a year from now, I could sell one or two ounces of gold for $100k, I would come out very far ahead. If inflation hasn't hit by a year from now, maybe I could get one of those IRS extensions, ha, ha.

    In other words, I would be betting on the dollar becoming worthless before the tax bill comes due. Or, if the dollar has become worthless and the IRS doesn't even bother collecting them anymore, I can just plead poverty, like 99% of everyone else in the country. Maybe we will have switched to paying with Zimbabwe $100 Trillion notes by then. Who knows?

    If anyone has some recommendations about this, I'd love to hear them!

    1. Be aware.

      Cap gains rates change on 1/12013!!!!!

  3. The yield on 10 year US bonds is currently 2.28%, which is low but higher than the 1.9% it was a few months ago.

    Do you or any of your readers envision this becoming a serious problem? And if so, at what rate does it become an issue?

    Can Bernanke really just buy more and more bonds and keep the rate under 2.5% indefinitely?

    1. Sure, the Fed can keep rates below 2.5% forever. The problem is in order to do so it must print up a lot of paper to buy the gov't debt.

      The inflation caused would be massive and never ending there would be rioting in the streets (There will be rioting in the streets in our current path but even worse if the Fed tries to keep rates as low as they are forever).

  4. In-Place Oil Shale Resources Underlying Federal Lands in the Green River and Washakie Basins, Southwestern Wyoming